Vestas Wind System, one of the leading makers of wind turbines, may soon be acquired by Ming Yang Wind Power Group Ltd of China, according to reports. The New York-listed Ming Yang is one of the leading wind turbine manufacturers in China and the world.
According to sources familiar with the reported deal, Ming Yang will spend around 1.4 to 1.5 billion euros (approximately $1.72 billion to $1.97 billion) to acquire the Danish company. In the first quarter of this year, Ming Yang’s revenue plummeted more than 70 per cent, mainly due to overcapacity in the industry and policies by the Chinese government.
An increasing competition in price and reduced demand have hit the Chinese wind turbine manufacturers’ profit margins, Zhang Chuaiwei, chairman and CEO of Ming Yang was earlier quoted as saying. “It is expected that the wind power industry in China will continue to face difficulties and will see further reductions in newly installed capacity in 2012,” Zhang has said. “Nevertheless, the unusually demanding conditions now prevalent in the industry may prompt further market consolidation, which we believe we will benefit from as a leading market player.”
Vestas also reportedly suffered a huge loss in the first quarter as a result of delayed deliveries and rising costs largely. It has installed only 501 megawatts of wind turbines in China last year, down by 42 per cent from 2010. However, reports of denial of such a deal by both Vestas and Ming Yang have also surfaced.